DFO's new entrant program requires applicants to advance cash

Friday, April 19, 2013

by SUSAN MANN

Norwood-area dairy farmer Will Vanderhorst knows first hand what its like to get a helping hand to start farming.

Vanderhorst, the Dairy Farmers of Ontario board member for Region 5 (City of Kawartha Lakes, Durham Region, Peterborough and York) was a new entrant to the dairy industry in 1987. He grew up on a hobby beef farm but worked on neighbouring dairy farms during his adolescence. After finishing a two-year agriculture diploma program at the University of Guelph in 1986, he decided to get into the dairy business.   

He bought a small ongoing dairy operation in his area “with a little help from my family” and the provincial beginning farmers assistance program, which gave rebates on mortgage interest rate of about five per cent. The assistance program provided help to all young people wanting to enter farming, not just the dairy industry.

The provincial assistance program “was really necessary for myself to enter an industry that’s very capital intensive,” he says. Vanderhorst still farms the operation he bought in the 1980s and he milks 50 cows.

But governments started backing away from providing assistance programs in the 1990s and that’s why its good Dairy Farmers has its assistance programs – the New Producer program and the New Entrant Quota Assistance program, he notes.

The programs are absolutely essential for an industry, he says. “You have to be able to attract new people to an industry. Those new people bring fresh ideas.”

But Sean McGivern, president of Practical Farmers of Ontario, has some concerns about the new entrant programs. One is that the new producers in the program with the quota loans, the New Entrant Quota Assistance program, must hold at least 12 kilograms of their own quota at all times to be able to continue in the program.

“That’s still $300,000 that a young farmer has to come up with,” he says. But he’s skeptical that a young person just out of agricultural college and wanting to farm can get that amount “before they even own the property, the equipment, anything.”

McGiven says it’s not a realistic expectation to place on young farmers. He also says rather than providing quota to existing producers whenever there’s a quota increase for market expansion, that quota should be earmarked for new producers. It could be made available to them through a lottery system or some type of application process.

“I don’t know why the existing producers feel that they’re the only ones entitled to the free quota,” he says.

In a report released at the Dairy Farmers of Ontario spring policy conference last month, Dairy Farmers outlined the changes it made to its new producer program since it was introduced in 2009. This is the program where one new farmer has priority access on each monthly quota exchange to buy up to 35 kilograms of quota.

Since the new producer program was introduced in Ontario, 45 new producers have entered the dairy industry by using it. George MacNaughton, operations division director, says by email those numbers don’t include the people who started in the New Entrant Quota Assistance program, which is a separate program.

Applications to the new producer program were temporarily suspended in 2011 pending a review. Dairy Farmers started accepting applications again in November 2012 but also introduced some changes, including a $1,000 non-refundable application fee and a $10,000 advance deposit that must be paid one year before the applicant’s assigned month to bid on the exchange. The $10,000 deposit is applied to the applicant’s first quota purchase and isn’t returned if the person withdraws from the lineup, doesn’t bid on their assigned quota exchange month, or doesn’t produce and market milk, the DFO report says.

Farmers in the new producer program lineup who are accepted and then participate in the New Entrant Quota Assistance program, which provides quota loans to successful applicants, get their application fee and the $10,000 advance, if they’ve already paid it, returned.

Since November 2012, DFO received 11 new applications, each providing the $1,000 fee for the new producer program. Applicants previously in line before the changes were introduced didn’t have to pay the $1,000 fee, MacNaughton says. The $10,000 advance deposit requirement started in November 2012 for the person assigned to bid on this November’s quota exchange.

There are currently 92 applicants in the new producer program lineup and it will still take a long time before they all get through the line. If all of them provide the $10,000 advance deposit, it will take until 2021 before they all make it through, MacNaughton says. BF